CASE STUDY 73155 How Land Tenure Regularization can contribute to agricultural growth in Rwanda DANIEL AYALEW ALI, KLAUS DEININGER, MARGUERITE DUPONCHEL AND LORAINE RONCHI INTRODUCTION After remarkable social and economic reconstruction since 1994, Rwanda aspires to become a middle income country by 2020 with a strong focus on inclusive growth. In this context the Government of Rwanda (GoR) has recognized the critical nature of land policy and agricultural growth. The Economic Development and Poverty Reduction Strategy (EDPRS) identifies higher agricultural productivity and transformation of the sector towards high value added as a key pillar and points towards land registration as a critical element to achieve this goal by increasing productivity of land use, reducing conflict, empowering women, and improving overall governance. Still, links between the two sectors have thus far remained largely implicit. A recent household survey that includes information on both allows us to draw out some linkages that help illustrate the critical nature of the land sector for Rwanda’s Fig. 1. Terracing agricultural growth. Agriculture accounts for about 36 percent of realization of Rwanda’s vision of transforming GOR strategy to achieve poverty reduction Rwanda’s GDP, 80 percent of employment, itself from an agrarian to a knowledge-based and economic growth. Moreover, as land is and, in 2010, 45 percent of foreign exchange economy, as articulated in its Vision 2020 the principal asset for most Rwandan earnings. It also provides 90 percent of the document. households, security of tenure is vitally country’s food needs. Yet, if the country’s With a population growth of almost 3%, and important. To strengthen it, the GoR improved performance in GDP growth is largely more than 80% of households involved in embarked upon far-reaching legal and credited to strong agriculture growth, poverty farming activities, land scarcity poses critical institutional changes. The adoption of the remains largely a rural -and agricultural- challenges that need to be overcome for 1999 inheritance law, key provisions of phenomenon (World Bank, 2011). GoR Rwanda to reduce poverty and achieve which were also incorporated into the 2003 expenditure in the agriculture sector reflects its sustainable environmental management. The constitution, constituted a first step and priority, with budget allocations rising from 4.2 modernization of agriculture by introducing aimed to eliminate bias against female land percent in 2008 to 10 percent in 2011. But, in improved land administration, land use ownership. It was followed by the 2004 land addition to helping meet Rwanda’s growth, management practices and adopting policy and its codification in the 2005 poverty reduction and food security objectives, techniques to reduce soil erosion and organic land law (OLL). raising agricultural productivity is critical to the enhance soil fertility lie at the core of the Establishment of institutional structures at national and local level created the preconditions for the launch of a nationwide systematic Land Tenure Regularization (LTR) program in 2009, designed – after extensive piloting - to register the country’s estimated 10 million parcels. This ambitious program, which has become a model for other countries, has the potential to improve the livelihoods of millions of Rwandans. A World Bank analysis based on the four pilot cells of the program 2 provides preliminary indications that higher tenure security has a positive impact on productive investments such as soil and water conservation structures. The analysis suggests that the formalization of women’s rights on the land they cultivate may constitute a key element in achieving the objectives the GoR has set. It thus Fig. 2. Parcel demarcation indicates the enormous scope for identifying and establishing the key interactions of land management systems have no legal document on their females) indicate a typical household in their and policies with the GoR’s strategies for properties, the scope to formalize rights is area is likely to face expropriation in the next raising agricultural productivity, overall immense. Female headed households are five years. Not surprisingly, as a result, growth and reducing poverty as illustrated significantly more likely to not have households express a very high demand for by the figures below. documents, with 63% reporting no lease contracts and interim land certificates documents compared to 40% for male (96%). This implies that voluntary LTR CAN SIGNIFICANTLY CONTRIBUTE headed ones. While the perception of participation in the national LTR program is TO HIGHER TENURE SECURITY tenure security is high, with a large majority likely to be large and that a strategy to of households (on 85% of surveyed formalize existing rights can significantly The data highlights a low level of land parcels) reporting they can use their land affect investment decisions and behaviors of ownership documentation throughout the forever without losing it, the data highlights farmers, while reducing the fear of country. With about half of the surveyed concerns about expropriation. Roughly half expropriation and potential of disputes. households reporting that they currently the respondents (equally for males and Table 1: Land tenure and registration (in percent unless specified) Fem. Male 1th 2nd 3rd 4th Total Head Head Qtile Qtile Qtile Qtile Can leave parcel forever without losing land 85 83 85 *** 83 82 88 *** 85 * Likelihood that a hhd will face dispute 20 19 24 *** 26 19 *** 19 *** 16 *** Likelihood of expropriation 49 50 47 * 54 48 *** 47 *** 49 *** Has no legal document 47 63 40 *** 64 54 *** 39 *** 29 *** Want to obtain a lease contract & interim land cert. 96 96 96 94 96 * 96 ** 97 *** Willing to pay for the certificate 69 52 75 *** 53 64 *** 75 *** 81 *** of which, maximum per parcel in RWF 1134 1032 1161 989 966 1065 1415 ** ***, **, *: ttest significant at 10%, 5%, 1%. Quartiles, total value of assets. Source: Own computation from 2011 World Bank Land Tenure Regularization Survey 3 subsequent transactions might pose a serious obstacle to long term viability of the land management system in Rwanda as it may push the poor back into unsecure informal land tenure and a less regressive approach, possibly involving some form of cross subsidy from urban to rural areas might be considered. LAND REGISTRATION CAN HAVE IMPORTANT GENDER EFFECTS Females are actively engaged in making decisions regarding land use and land management, but the intention to record parcels under joint ownership among couples – before LTR –is consistently low (28 percent) across all wealth categories. Through legal training on marriage and inheritance laws, LTR can make a large contribution to empowering women by closing this “rights recognition gap�. In addition, female headed households -of which only 63% have ownership documents for their land- should see their tenure security greatly improve by LTR. Registration- induced effects on increased investment, productivity and livelihoods are thus likely to have a clear gender dimension. This will affect broader socio-economic Fig. 3. Woman collecting her land title, signing with finger print development goals as higher income levels for women has been seen to lead to significantly reduce infant mortality, improved nutrition and increased investment in education.4 Special attention will be FEE STRUCTURES MAY WARRANT ATTENTION warranted regarding the 22 percent of households who live as couples but do not have marriage Contrary to what is practiced by most other countries, Rwanda aims for a high certificates, to ensure that females who are not legally element of cost recovery even for initial issuance of documents. Survey data married will not lose de facto rights they may have on suggest that this may not be conducive to quick implementation: Partly due to parcels jointly owned with their partners. To mitigate lack of knowledge, willingness to pay for certificates is, with some 30%, modest the risks of increases in vulnerability, e.g. in the case and even for those willing to pay, a significant share offering less than the fee of dispute or separation this poses, intensive set of RwF 1,000 (about USD 1.5) per parcel set by the Government 3. High sensitization on the importance of legal marriage and levels of non-collection of leases could undermine the long term sustainability of joint registration of land before the implementation of LTR. Probably even more important, the RwF 20,000 flat fee to register the program will be needed. Table 2: Female rights (in percent) 1th 2nd 3rd 4th Total East North South West Qtile Qtile Qtile Qtile If married, civil marriage 78 82 *** 83 *** 80 68 *** 59 75 *** 83 *** 89 *** If married, under regime of community of property 72 75 ** 73 77 *** 62 *** 57 69 *** 76 *** 80 *** Registration and decision making - parcel level REG.: Male head or husband only 52 54 ** 52 43 *** 59 *** 38 48 *** 53 *** 60 *** REG.: Female head or wife only 26 31 *** 22 *** 23 *** 27 43 32 *** 23 *** 16 *** REG.: Husband and wife jointly 21 13 *** 24 *** 32 *** 13 *** 16 19 ** 22 *** 23 *** Joint decision on crops to grow 62 64 * 65 *** 62 55 *** 60 58 63 64 ** Joint output management 60 54 *** 61 64 *** 61 60 58 58 62 ***, **, *: ttest significant at 10%, 5%, 1%. Quartiles: total value of assets Source: Own computation from 2011 World Bank Land Tenure Regularization Survey 4 4 considerable scope for poor households Table 3: Investment and production (in percent) 1th 2nd 3rd 4th to invest more in productive investments Total Qtile Qtile Qtile Qtile (including education). However, it is well Parcel will benefit from new soil conservation known that risk aversion and high 79 74 77 *** 82 *** 81 *** structure Any existing physical soil and conservation transaction costs may make use of land 55 51 53 57 *** 56 *** structure as collateral difficult even if clear title to it Used chemical fertilizer 08 04 07 *** 08 *** 11 *** exists, suggesting that the impact of LTR on credit access will vary across regions. Used pesticides 06 03 05 *** 06 *** 07 *** In urban areas and peri-urban areas, Used manure 48 40 46 *** 49 *** 54 *** where credit effects could be large, a key Used improved seed 12 10 11 11 * 15 *** precondition to avoid fraud and ensure Used extension advice 10 08 09 ** 10 ** 11 *** the system’s reliability will be to establish a clear link between the mortgage Lost any produce 26 32 30 25 *** 21 *** registries with the land administration ***, **, *: ttest significant at 10%, 5%, 1%. Quartiles, total value of assets. Source: Own computation from 2011 World Bank Land Tenure Regularization Survey system to avoid multiple mortgages on the same land parcels. reported to have potential to benefit from THERE IS HIGH POTENTIAL FOR new soil and water conservation structures, PRODUCTIVE INVESTMENT AND only 55% have any such existing structures IMPROVED ACCESS TO CREDIT and out of these only 8 percent have radical terrace and less than 4% check dam or The data indicate levels of productive water reservoir. This observed low level of investment well below potential: organic investment and input use is the result of a fertilizer is used on less than half the complex number of factors, which have parcels in the survey; improved seeds on recently been discussed in Rwanda’s policy 12 percent; chemical fertilizers on 8 percent circles.5 and pesticides on 6 percent. Input use is Access to finance raises similar issues. The relatively lower for female-headed baseline survey indicates that the credit households, which, along with the poorest market in Rwanda is relatively inactive with households, report higher losses after the only 38% of households having applied for late rains of September 2010, indicating loans in the previous year, almost none in less resilience to drought. Yet the scope to the formal sector. While loans are equally increase resilience to future climatic shocks used for investment and consumption, their Fig. 3. January harvest is high. Whereas 79 percent of parcels use increases with wealth so that there is (photo credit: Clive English/LTR project) Table 4: Access to credit (in percent) Fem. Male 1th 2nd 3rd 4th Total Head Head Qtile Qtile Qtile Qtile Any loan in the past 12 months 38 34 40 *** 33 39 ** 42 *** 39 *** % of loans (amount) in the informal sector 47 51 46 56 53 45 *** 38 *** % of loans (amount) in the semi-formal sector 46 46 46 42 44 50 ** 48 % of loans (amount) in the formal sector 06 03 07 *** 01 03 05 *** 15 *** % of loans (amount) for consumption 48 53 47 * 63 55 ** 45 *** 33 *** % of loans (amount) for investment 52 47 53 ** 36 45 ** 55 *** 67 *** % with land as a collateral (semi-formal) 31 23 34 *** 26 30 33 34 % with land as a collateral (formal) 50 69 47 60 92 52 39 ***, **, *: ttest significant at 10%, 5%, 1%. Quartiles: total value of assets. Source: Own computation from 2011 World Bank Land Tenure Regularization Survey 5 Table 5: Market participation (in percent) 1st 2nd 3rd 4th Total East North South West Qtile Qtile Qtile Qtile At the household level Rented out any land 12 14 ** 12 07 *** 13 12 11 11 14 Rented in any land 27 32 *** 25 19 *** 27 24 29 ** 28 * 26 Purchase land in the last 5 yrs 23 18 *** 26 ** 27 ** 26 * 11 18 *** 29 *** 36 *** Sold land 12 10 ** 11 12 16 *** 13 13 11 11 At the parcel level Parcel acquired since 2010 14 14 13 *** 12 *** 19 *** 18 18 14 *** 10 *** ***, **, *: ttest significant at 10%, 5%, 1%. Quartiles: total value of assets. Source: Own computation from 2011 World Bank Land Tenure Regularization Survey the population from the benefits of land REFERENCES LAND MARKETS ARE VERY ACTIVE records. Indeed, although co-ownership is legally possible, the impossibility to 1. Contrary to what is observed in other African World Bank. 2011. Rwanda subdivide will prevent individual market countries with lower levels of population Economic Update (Spring Edition). participation. In sum, if the system is kept World Bank: Kigali. density, land markets in Rwanda are very up to date, it has a tremendous potential for active: 23 percent of households surveyed generating resources required for financial 2. Ali, D., Deininger, D. and M. Goldstein, purchased land in the past 5 years, while 12 sustainability, but the challenge will remain 2011. Environmental and gender impacts percent sold parcels. The rental market is to find an equilibrium fee that does not of land tenure regularization in Africa : also vibrant with 27 percent of households discourage transaction registration and pilot evidence from Rwanda, Policy renting-in and 12 percent renting-out. The Research Working Paper, 5765. maximizes local government revenues. average yield of households who rented-in is 14 percent higher than for those renting out, 3. Poorest households are exempt from suggesting that market-based transfers to CONCLUSION the registration fee as per ministerial more productive households can contribute order, article 6, Official Gazette no. 39 of to significantly increased levels of The evidence from our household survey 27.09.2010. agricultural productivity. clearly highlights the scope for LTR to help 4. One implication is that, right from the start, Rwanda achieve its growth and poverty The World Bank, 2011. World institutions for land administration will have reduction objectives, especially in rural Development Report, Gender Equality to handle a large number of transactions. At areas and the agricultural sector where and Development the time of the survey (in early 2011), 14 % poverty is highest. It also highlights that 5. of owned parcels in rural Rwanda had been doing so will require decisions to overcome Morris, Michael, Loraine Ronchi and David Rohrbach. 2009. “Building acquired after 2010. Even without increase challenges in a number of areas including: sustainable fertilizer markets in Africa.� In in transaction frequency, covering all (i) increasing the protection of potentially Conference Proceedings: Towards transactions will require GoR to register 1.1 vulnerable groups such as traditionally Priority Actions for Market Development million transactions annually6. To reduce married women; (ii) ensuring the long term for African Farmers (AGRA and ILRI, transaction costs and have services close to sustainability of the land records by building forthcoming). users, the choice of a decentralized model of adequate capacity of the decentralized 6. service delivery, with registration at the administration and clarifying law provisions; The calculation is based on the most District level, is thus appropriate. But, it (iii) linking the mortgage and land registries. recent estimate of the number of parcels requires infrastructure development and Continued monitoring will help ensure that from GoR set to 10 millions. capacity building at a large scale. In the progress in doing so is tracked and average district (in terms of the number of obstacles to achieving desired impacts parcels), the Land District Office will have to identified early. The baseline and planned register 36,000 transactions a year, or more follow-up surveys will provide a basis for than 3,000 per month, a figure that may be doing so and, in the process, draw significantly higher in urban and peri-urban important lessons for Rwanda and beyond. Photo credit: Marguerite Duponchel Kigali province. Also, as the average parcel size is well below the 1ha requirement below which no subdivision is allowed for rural This case study was prepared by a team from the Development Economics Research Group and the agricultural land, a strategy will need to be Africa Region Agriculture Team of the World Bank in collaboration with the Rwanda Natural Resources Authority. The UK Department for International Development, the Bank Netherlands developed to deal with small parcels in a Partnership Program and the International Growth Centre provided generous financial support. way that does not shut exclude large parts of The findings, interpretations, and conclusions expressed are entirely those of the authors. They do not necessarily represent the views of the Government of Rwanda, and of the World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.